California

Lockyer Seeks a Buyer for Shell Refinery

California Atty. Gen. Bill Lockyer has hired an outside expert to help find a buyer for a Bakersfield refinery that Shell Oil Co. plans to close this fall, a spokesman for Lockyer said Wednesday.

"Shell has said the refinery is not a marketable commodity. We're going to find out if that's true," spokesman Tom Dresslar said. "The ultimate objective is to try to find a viable buyer."

Years ago, the closure of a refinery was welcome news -- at least to its neighbors. But these days, losing a gasoline-making plant would immediately worsen California's chronically tight fuel supply and affect gasoline prices in other states, including Washington, Arizona and Nevada.

Unimpressed with what he believes is a halfhearted effort by Shell to sell the refinery, Lockyer will pay Malcolm Turner, a Houston-based industry consultant, as much as $35,000 through the end of July to "locate a buyer with the financial capability, who will increase production of refined product and implement the clean-products technologies while increasing gasoline output to the California market," according to the state's contract with Dallas-based engineering consulting firm Turner Mason & Co.

"I couldn't be happier .... This is what you do if you're serious about selling," Sen. Barbara Boxer said Wednesday.

The California Democrat, who has urged Shell to hire a broker to help find buyers for the refinery, called Lockyer's move "very creative."

Shell spokesman Stan Mays said of Lockyer's consultant: "We welcome Malcolm Turner as we would any other inquiring party, and we would provide him with information once he signs a confidentiality agreement."

He added, "To date, we have 21 inquiries in various stages. We still have not received any credible offers."

One problem is that Shell proposes to sell the refinery without its crude oil supply -- making a sale more difficult.

Shell's Bakersfield refinery, although among the state's smallest, is earning big profit and produces 2% of California's gasoline and 6% of its diesel.

Shell said it would close the facility Oct. 1 because it wanted to divert more of its San Joaquin Valley heavy crude oil to its Martinez refinery in the Bay Area instead of using it in Bakersfield.

Critics have pointed out, however, that the refinery is situated in the nation's most lucrative gasoline market, surrounded by prolific oil fields. They believe Shell wants to further reduce gasoline supplies in California so that profit at its Martinez and Wilmington refineries will increase.